Share Money & Sources of Finance
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What is money?
Money is something of value that is accepted by people in exchange for goods and services.
What is a source of finance?
This refers to an individual obtaining money in various ways and or from a variety of places
What is an agreement from the bank that allows an individual to withdraw (take out) more money than they have in their account (up to an agreed limit).
A bank overdraft
What length of finance is a credit card?
Short Term
What length of time must a short term source be repaid in?
Less than a year
What length of time must a medium term source be repaid in?
Between 1 and 5 years
What length of time will a long term source be repaid in?
5+ years
Give one example of a financial institution that someone can get a personal loan from
Bank / Credit Union
What is collateral?
An asset offered against the loan as security in the event that the lender doesn't make the repayments
Is it true that some jobs are less risky and may be granted a loan over other jobs?
Yes
When using Hire Purchase as a source of finance, who does the customer repay?
The Hire Purchase company
What must you repay back with a source of finance?
Interest
Explain the term creditworthiness
The lenders previous credit history - if they're borrowed before / if they've made previous repayments on time
Give one example of a long term source of finance
Mortgage
What is the most common source of finance that individuals earn?
Their wages/salaries
True or False: When applying for a loan, the borrower must show proof of capacity.
True
